The View from Korea: Blockchain, Tokenization, and the IoT

August 10, 2018

David Fragale

Korea Blockchain Week, held last month in Seoul, was inspiring. Of course just being back in South Korea was inspiring.

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This whole nation seems focused on the future, as does much of the rest of Asia. What does it say when lists of the world’s most beautiful airports invariably include Seoul’s Incheon, as well as airports of Singapore, Hong Kong, and China?

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If airports provide the front door into a nation, Incheon sets the pace for a Korea that in many ways is leading the world in adopting all things blockchain, and showing a passion for digital currencies.

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Korea’s population of 53 million represents less than 1 per cent of the world’s 7.442 billion people, yet according to Coin Telegraph, Korea is responsible for nearly 20 per cent of global Ethereum trading. CryptoCurry recently reported that South Korea had surpassed both the U.S. and China to become the global leader in Ethereum trading.

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Blockchain: A Gift to Cybersecurity

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Koreans seem extremely tech literate, and I found many with a passion for blockchain. During a rooftop interview, I was asked about the role blockchain played for Atonomi. My immediate response was that the Atonomi team sees blockchain as a gift to cybersecurity—especially in regards to IoT.

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And it’s a gift that is desperately needed. Consider the incredible adoption pace for IoT devices—with an estimated 5 million new devices coming online every day. We already have some 8 billion devices connected, and at this rate the next decade will see some 75 billion devices.

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As difficult as it is to imagine 50 billion of anything, the figures take a quantum leap when you consider the potential interconnections of these billions of devices. The potential device-to-device interconnections of just 50 billion devices would surpass the number of grains of sand on our planet. That’s a huge number—which also makes it a huge array of attack vectors. This is why all of the IoT needs to be secured.

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And this is why blockchain is such a gift to cybersecurity. With its immutable ledger, the blockchain gives us the ability to register a device on the network, give it a digital identity, and then track its reputation over time. This is what Atonomi does. And with our reputation tracking, we can trace the behavior of each device to see whether it's good or bad, if it has been hacked, things like whether it is up-to-date on security patches and whether it’s upgrading its software on a timely basis. All that information can be stored on an immutable ledger. This also means we have a way for one device to validate the reputation of another device—again, using an immutable blockchain ledger.

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Tokenization

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Blockchain also enables tokenization, which promises to become an ever greater part of IoT infrastructure. In the case of Atonomi, we are using tokens for critical parts of our ecosystem. We use tokens for device registration and activation. And beyond that, we see using tokens with device manufacturers. Tokens give us the ability to align behaviors to enhance security. A device manufacturer, for example, could potentially earn tokens for creating IoT devices that are more secure by design—changing the economic landscape of the IoT ecosystem.

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In another tokenization scenario, imagine a homeowner who has a smart TV and a smart refrigerator, both in need of a software upgrade. Currently, owners aren’t incentivized—beyond the value of keeping their devices secure—to bother with the upgrade. Tokenization could change that. An owner with a blockchain-based history of implementing upgrades and updates, could be rewarded with tokens—given a financial incentive to enhance their own security, which in turn enhances the security for others.